Lixil of Japan poised for growth after investment of R1.6bn in SA

INTERNATIONAL - Listed Japan-based Lixil Group Corporation is investing a total of R1.6billion in South Africa, part of which includes the acquisition in September last year of the remaining 49percent interest in Grohe Dawn Watertech (GDWT).

Lixil acquired Dawn’s shareholding in GDWT for R324.5million.

International sanitary fittings group Grohe, indirectly owned by Lixil, acquired a 51percent stake in the Watertech companies of Dawn for R880m in 2014.

Lixil has retained Dawn as its long-term master distributor of the GDWT product range in South Africa and 12 countries in sub-Saharan Africa.

Lixil president and chief executive Kinya Seto said the corporation’s total investment in South Africa now stood at R1.6bn.

Seto said for many years between only 1percent and 2percent of GDWT’s sales were invested in the facilities, but there was a need to catch up with the lack of capital expenditure.

“Many of the facilities are 60 years old, so we need to upgrade them to modern facilities and invest more,” Seto said. “This year, we are planning to invest 10percent of sales.”

Seto said this would probably translate into an investment of about $13million (R152m) in GDWT’s manufacturing facilities in South Africa.

He said they also needed to create a better environment for their employees, and this formed part of the investment.

Improve

However, Seto confirmed Lixil needed to invest on an ongoing basis to improve the facilities, such as ceramics and acrylics.

He said the duration of its investment programme was “very unpredictable” because of the previous lack of investment.

Investment was necessary for the long-term future of the business, because manufacturing technology was changing, he said.

He said 60 to 70 years ago most of the products were made from castings, but they were now being forged, and he believed in the next 10 years there could be a move towards 3D printing, with the types of material also changing.

John Westermeyer, the chief marketing officer at GDWT, said more than R100m would be invested into different parts of the business this year, with new machinery introduced for different parts of the manufacturing process to modernise and upgrade the facilities.

Seto said GDWT was the only company that manufactured locally every type of domestic water product, including toilets, baths, taps and shower heads.

GDWT has manufacturing plants in Krugersdorp, Meyerton, Springs and Centurion in Pretoria that provide employment to about 1400 people.

Seto said the company was committed to growing the business and did not have any plans to reduce the workforce in South Africa.

However, they needed to be flexible because of the changing economic environment.